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Asia Summary

Asian equity markets are currently trading mixed, apparently largely ignoring the most recent North Korean missile launch, which was reported on early Saturday. In M&A news, US listed CBS announced that it would acquire Australia’s Ten Networks, which has already been placed into administration, for an undisclosed amount.

In the currency markets, the Euro had gained by over 0.25% versus the US dollar, but has since pared gains. On Friday at Jackson Hole, ECB''s Draghi did not directly address currencies. Economic data points expected this week include Germany Aug Prelim CPI, EU Prelim Aug CPI, China Manufacturing PMI, Australia Q2 Private new Capex, Japan Q2 Capex and US ISM Aug Manufacturing and non-farm payrolls

US NYMEX gasoline futures opened the session higher by over 6%, as companies including Exxon and Shell noted they would shut facilities located near Houston amid the impact of Harvey, which was downgraded to a tropical storm on Saturday. Shell said its Deer Park Texas refinery (up to 340K bpd) may be shut for up to 1 week.

According to the National Hurricane Center (NHC),‘unprecedented' flooding is occurring over Southeastern Texas due to Harvey and it expects the center of the storm to move off the middle of Texas’ coast on Monday and wander just offshore through Monday night. The NHC also said the storm is expected to produce additional rainfall through Friday over parts of Texas.

Speakers and Press

(EU) France could be willing to begin Brexit trade talks by Oct - UK Press

(JP) BoJ Gov Kuroda: Reiterated policy to stay very accommodative; Does not think Q2 GDP growth rate of 4% can be sustained (update from Aug 25th)

(JP) Japan PM Abe cabinet approval rating rises by 4 pct points to 46% - Nikkei

(KR) Bank of Korea: Domestic markets stabilizing after turbulence in early Aug over North Korea tensions

(NZ) New Zealand Wine Exports in June year +5.9% to NZ$1.66B (record high)

(US) On Sunday, President Trump reiterated "we are in the NAFTA renegotiation process with Mexico, and Canada. Both being very difficult, may have to terminate?"

Asian Equity Indices/Futures (00:30ET)

Nikkei flat, Hang Seng +0.5%, Shanghai Composite +0.9%, ASX200 -0.7%, Kospi -0.4%

Equity Futures: S&P500 -0.1% ; Nasdaq -0.2% , Dax -0.2% , FTSE100 -0.2%

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.1921-1.1960; JPY 109.09-109.40; AUD 0.7927-0.7950; NZD 0.7236-0.7256

Aug Gold +0.1% at 1,299/oz; Aug Crude Oil -0.4% at $47.68/brl; Sept Copper +0.5% at $3.07/lb

GLD SPDR Gold Trust ETF daily holdings rise 5.91 tons to 805.2 tons

(CN) PBOC SETS YUAN REFERENCE RATE AT 6.6353 V 6.6579 PRIOR (strongest yuan fix since Aug 19, 2016)

(CN) China PBOC OMO injects CNY100B v skipped 7 and 14-day reverse repo prior; Net drain CNY100B v CNY130B drain prior

(AU) Australia sells A$400M in 2.75% 2035 bonds, avg yield 3.1008%, bid to cover 4.16x

(KR) Bank of Korea sells KRW900B in 1-year monetary stabilization bonds at 1.53 v 1.52% prior

US markets on close (from Friday)

Best Sector in S&P500: Real Estate +0.5%

Worst Sector in S&P500: Technology flat

At the close: VIX 11.28 (-0.95 pts); Treasuries: 2-yr 1.338% (flat), 10-yr 2.169% (-3bps), 30-yr 2.749% (-2bps)

US Market Summaryv (From Friday, Aug 25th)

US stock markets commenced the week testing more than one month lows in most cases. The S&P found support just above the 100-day moving average on Tuesday. As Washington looked to put the controversy surrounding the President and his reaction to Charlottesville in the rear view mirror, rekindled hopes for genuine tax reform along with thin summer trading conditions were widely cited as fostering the turnaround. A host of late season retail earnings reports surpassed expectations which provided a boost to investor sentiment. The Russel 2000 led the way higher as investors placed bets small cap US centric businesses would get the most benefit from tax relief. For the week, the DJIA gained 0.7%, the S&P500 added 0.7%, and the Nasdaq rose 0.8%.

The greenback retreated further led by strength in the Euro. The economic data, Europe’s in particular, continued to signal building economic momentum. By Friday when neither Fed Chair Yellen nor ECB President Draghi directly addressed monetary policy at the Jackson Hole symposium, the Euro hit fresh one and half year highs above 1.1920. Gasoline prices moved up late in the week as it became clear Hurricane Harvey would make landfall in southern Texas and bring with it up to 30 inches of rain.

USD/CHF - 0.9557

Most recent candlesticks pattern : N/A

Trend                                    : Down

Tenkan-Sen level                  : 0.9562

Kijun-Sen level                    : 0.9600

Ichimoku cloud top                 : 0.9659

Ichimoku cloud bottom              : 0.9648

Original strategy :

Bought at 0.9620, stopped at 0.9595

Position : - Long at 0.9620

Target :  -

Stop : - 0.9595

New strategy  :

Sell at 0.9590, Target: 0.9490, Stop: 0.9625

Position : -

Target :  -

Stop : -

Friday’s selloff together with the breach of previous support at 0.9583-86 confirm top has been formed at 0.9773 earlier and bearishness is seen for the erratic decline from there to extend weakness to 0.9525-30, then towards support at 0.9490, however, near term oversold condition should prevent sharp fall below latter level. Looking ahead, A drop below 0.9490 would signal early downtrend has resumed and extend far to 0.9455-60 but recent low at 0.9438 should hold from here.

In view of this, we are looking to sell dollar on recovery as previous support at 0.9583-86 should turn into resistance and limit dollar’s upside, bring another decline. Above another previous support at 0.9620 would defer and suggest a temporary low is possibly formed, bring rebound to 0.9650 but still reckon resistance at 0.9663 would hold from here.

GBP/USD - 1.2888

Most recent candlesticks pattern   : N/A

Trend                                 : Near term down

Tenkan-Sen level                 : 1.2894

Kijun-Sen level                    : 1.2867

Ichimoku cloud top              : 1.2806

Ichimoku cloud bottom        : 1.2805

Original strategy :

Buy at 1.2755, Target: 1.2855, Stop: 1.2720

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2850, Target: 1.2950, Stop: 1.2815

Position : -

Target :  -

Stop : -

Although cable has retreated after intra-day initial brief rise to 1.2939, as last week’s rebound from 1.2774 suggests a temporary low has possibly been formed there, reckon downside would be limited to 1.2850 and bring another rebound later, above said resistance at 1.2939 would add credence to this view and extend the rise from 1.2774 low for retracement of recent decline to 1.2970-80, then towards 1.3000 but price should falter below previous resistance at 1.3032.

In view of this, we are looking to buy sterling on pullback as 1.2850 should limit downside. Below previous resistance at 1.2837 would defer and risk test of 1.2810-15 but only break there would abort and signal the rebound from 1.2774 (last week’s low) has ended instead, risk weakness to 1.2775-80 first.

EUR/USD - 1.1930

Most recent candlesticks pattern   : N/A

Trend                      : Sideways

Tenkan-Sen level              : 1.1939

Kijun-Sen level                  : 1.1867

Ichimoku cloud top             : 1.1798

Ichimoku cloud bottom      : 1.1782

Original strategy  :

Bought at 1.1765, met target at 1.1865

Position : - Long at 1.1765

Target :  - 1.1865

Stop : -

New strategy  :

Buy at 1.1870, Target: 1.1970, Stop: 1.1835

Position : -

Target :  -

Stop : -

The single currency finally rallied on Friday and upmove gathered momentum after breaking indicated resistance at 1.1828 (now support), our long position entered at 1.1765 met upside target at 1.1865 and euro eventually surged above recent high at 1.1910, adding credence to our bullish view for a resumption of recent upmove, hence upside bias remains for further gain to 1.1970-80, however, near term overbought condition should limit upside to 1.1200-10 and reckon 1.1250-60 would hold from here. 

As we have taken profit on our long position entered at 1.1765, would not chase this rise here and would be prudent to reinstate long on pullback as the Kijun-Sen (now at 1.1867) should limit downside and bring another upmove. Only below previous resistance at 1.1828 (now support) would abort and suggest a temporary top is possibly formed, risk test of 1.1800 but break of support at 1.1773 (Friday’s low) is needed to confirm.

USD/JPY - 109.15

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 109.21

Kijun-Sen level                  : 109.44

Ichimoku cloud top             : 109.53

Ichimoku cloud bottom      : 109.31

Original strategy  :

Bought at 109.25, Target: 110.25, Stop: 108.90

Position :  - Long at 109.25

Target :  - 110.25

Stop : - 108.90

New strategy  :

Hold long entered at 109.25, Target: 110.25, Stop: 108.90

Position :  - Long at 109.25

Target :  - 110.25

Stop : - 108.90

Although the greenback retreated quite sharply after Friday’s marginal rise to 109.85, outlook remains consolidative, reckon downside would be limited to 109.00 and bring rebound later, above 109.50-55 would bring test of said resistance at 109.85, break there would extend the erratic rise from 108.60 low to 110.00, then towards resistance at 110.37 which is likely to hold from here. 

In view of this, we are holding on to our long position entered at 109.25. Only below said support at 108.84 would abort and bring retest of said support at 108.60, break there would revive bearishness and confirm recent decline has resumed for further weakness to 108.30 (1.618 times projection of 110.95-109.67 measuring from 110.37), then towards 108.00.

Weekly

    •    Last Candlesticks pattern: Shooting star 
    •    Time of formation: 31 Jul 2017
    •    Trend bias: Near term up

Daily

    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 2 Aug 2017
    •    Trend bias: Up

EUR/USD – 1.1932

The single currency finally resumed recent upmove last Friday as the pair surged above recent high at 1.1910, adding credence to our bullish view that recent upmove from 1.0340 low has resumed and upside bias remains for this move to bring headway to psychological level at 1.2000, then 1.2050-60, however, loss of upward momentum should prevent sharp move beyond 1.2100 and reckon dynamic resistance at 1.2165-70 (50% Fibonacci retracement of 1.3993-1.0340) would hold from here, price should falter below 1.2200-10, bring retreat later.

On the downside, whilst initial pullback to 1.1870-80 cannot be ruled out, previous resistance at 1.1828 (now support) should contain downside and bring another rise later. Below the Tenkan-Sen (Now at 1.1811) would risk test of support at 1.1773 (Friday’s low) but only a daily close below there would abort and suggest a temporary top is formed instead, risk weakness to 1.0740 support first. Once this level is penetrated, this would provide confirmation, bring further fall to 1.0710 and later towards strong support at 1.1662 which is likely to remain intact.

Recommendation: Buy at 1.1870 for 1.2050 with stop below 1.1770.

On the weekly chart, last week’s rally formed a white candlestick and the breach of previous resistance at 1.1910 confirms recent upmove from 1.0340 low has resumed, adding credence to our bullishness for this move to extend gain to 1.2000, then 1.2050-60, however, weakening of near term upward momentum would prevent sharp move beyond 1.2160-70 (50% Fibonacci retracement of 1.3993-1.0340) and reckon 1.2220-30 would hold, price should falter below 1.2300-10, bring another retreat later.

On the downside, expect pullback to be limited to 1.1870-70 and previous minor resistance at 1.0828 should hold, bring such a rise. Below last week’s low at 1.1731 would defer and suggest top is possibly formed instead, risk test of support at 1.1662, only a drop below this level would add credence to this view, bring test of the Tenkan-Sen (now at 1.1636), break there would bring retracement of recent upmove to 1.1550-60 and later towards 1.1435, having said that ,downside should be limited to 1.1370 and support at 1.1312 should remain intact, bring rebound later.

Weekly

    •    Last Candlesticks pattern: Dark cloud cover
    •    Time of formation: 10 Jul 2017
    •    Trend bias: Down

Daily

    •    Last Candlesticks pattern: Evening doji
    •    Time of formation: 7 Aug 2017
    •    Trend bias: Down

USD/JPY – 109.12

Although the greenback has retreated after meeting resistance at 109.85, reckon downside would be limited to 108.80-85 and risk of another corrective bounce remains, above said resistance at 109.85 would bring recovery to 110.10-15 and then test of the Kijun-Sen (now at 110.40) but resistance at 110.95 should remain intact and bring another decline later. Below 108.60-63 would signal the rebound from 108.13 has ended, bring retest of this level. Once this recent low is penetrated, this would extend early decline from 118.66 top to 107.50, then towards 106.50-55 (61.8% Fibonacci retracement of 99.01-118.66), having said that, near term oversold condition should prevent sharp fall below there and reckon previous resistance at 105.53 would hold from here.

On the upside, whilst initial recovery to the Tenkan-Sen (now at 109.78) cannot be ruled out, reckon upside would be limited to the Kijun-Sen (now at 110.40) and resistance at 110.95 should attract renewed selling interest and bring another decline later. Above the lower Kumo (now at 111.66) would suggest the fall from 114.50 has ended instead, risk a stronger rebound to resistance at 112.20 but reckon upside would be limited to 112.40-45 and price should falter well below 113.00, bring another selloff later..
 

Recommendation : Sell at 110.55 for 109.00 with stop above 111.55.

On the weekly chart, the greenback traded within a relatively tight range last week as traders were in a wait-and-see mode, however, as long as minor support at 108.60-63 holds, risk of another corrective bounce cannot be ruled out, above 109.85 would bring recovery to 110.40-50, however, resistance at 110.95 should cap upside and bring another decline later. Below said support at 108.60-63 would extend the fall from 114.50 to previous support at 108.13 (2017 low), however, the pair needs to penetrate this level to confirm early fall from 118.66 top has resumed and extend decline to 117.40-50, then 117.00 but downside should be limited to 106.50-55 (61.8% Fibonacci retracement of 99.01-118.66) and previous resistance at 105.53 would turn into support, price should stay above 105.00, bring rebound later.

On the upside, although initial recovery to 109.85, then 110.40-50 cannot be ruled out, reckon resistance at 111.05 would limit upside and bring another decline later. Above the Tenkan-Sen (now at 111.55) would risk test of the Kijun-Sen (now at 111.82) but still reckon resistance at 112.20 would limit upside and bring another decline. A weekly close above resistance at 112.20 would suggest first leg of decline from 114.50 has ended instead, risk a stronger rebound to 112.90-00 but still reckon upside would be limited to 113.55-60 and price should falter well below resistance at 114.50, bring another decline later. 

Currency pair EUR/USD

The EUR/USD did break above the resistance trend line (dotted red) of the triangle chart pattern as expected. This breakout is a continuation of wave 5 (green) of wave 3 (blue). The first target is the round level of 1.20, which could cause a retracement.

The EUR/USD bullish breakout is building an internal 5 wave (purple) and is currently in a wave 3 (purple).

Currency pair USD/JPY

The USD/JPY remains caught in between support (green lines) and resistance (orange). A bounce could see price move higher towards the Fib levels of wave B vs A whereas a bearish break could indicate a downtrend continuation.

The USD/JPY is building a channel (red/blue lines) at the support zone (green).

Currency pair GBP/USD

The GBP/USD bullish breakout indeed took place as expected and started wave A (purple) of a larger wave 2 (red) correction.

The GBP/USD could have completed an ABC wave (purple) at the recent high or it could be building a wave 4-5 within wave A (purple). This depends on whether price will bounce at the 61.8% Fibonacci level of wave 4 vs 3.

A note on lower timeframe confirming price action...

Waiting for lower timeframe confirmation is our main tool to confirm strength within higher timeframe zones, and has really been the key to our trading success. It takes a little time to understand the subtle nuances, however, as each trade is never the same, but once you master the rhythm so to speak, you will be saved from countless unnecessary losing trades. The following is a list of what we look for:

• A break/retest of supply or demand dependent on which way you're trading.
• A trendline break/retest.
• Buying/selling tails ... essentially we look for a cluster of very obvious spikes off of lower timeframe support and resistance levels within the higher timeframe zone.
• Candlestick patterns. We tend to only stick with pin bars and engulfing bars as these have proven to be the most effective.

We typically search for lower-timeframe confirmation between the M15 and H1 timeframes, since most of our higher-timeframe areas begin with the H4. Stops are usually placed 1-3 pips beyond confirming structures.

EUR/USD

Weekly gain/loss: + 161 pips

Weekly closing price: 1.1919

The EUR was seen flexing its financial muscle last week, as weekly action crossed above resistance at 1.1871. Providing that the bulls can continue to dominate above this line, the next port of call will likely be the resistance line printed at 1.2044 (not seen on the screen). Something else that's worth noting is the USDX failed to breach support planted at 11854, while the EUR, as we already know, managed to push above its correlating resistance. Could this signify that the recent push north lacks energy?

The story on the daily timeframe shows that the recent move north largely took place on Friday, resulting in a push up into a supply zone pegged at 1.1968-1.1862. Also worth mentioning is the daily demand on the USDX at 11899-11932, which was brought into play due to Friday's selloff. This area held the dollar higher in the early stages of last week and therefore we could see history repeat itself. A push north from here would highly likely translate into a push lower from the daily supply currently seen on the EUR.

A quick recap of Friday's movement on the H4 timeframe reveals that the single currency punched above August's opening level at 1.1830, following Yellen's speech. After a minor spell of consolidation, the pair was further bid on comments made by Draghi regarding global and European recovery, consequently ending the day above the 1.19 handle. This could, technically speaking, set the stage for price to approach resistance located at 1.1962.

Suggestions: So, let's just run through what we have here. Weekly price suggests further buying could be on the cards. Daily price shows the unit trading around the upper edge of supply at 1.1968-1.1862. And H4 price points to a possible move up to a nearby resistance at 1.1962, which happens to be planted within the upper edge of the said daily supply.

Assuming 1.19 holds form, the noted H4 resistance will likely be bought into the picture either today or tomorrow. A long based on this is not something we'd be comfortable with given the current daily supply. A sell trade from the H4 resistance line, however, is tempting given its location within the daily supply. Though, selling into potential weekly flow above resistance and the pair's underlying trend is also not something we'd be comfortable participating in.

With the above points in mind, we will remain flat today and look to reassess structure going into Tuesday's open.

Data points to consider: No high-impacting news events scheduled today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

GBP/USD

Weekly gain/loss: + 6 pips

Weekly closing price: 1.2876

GBP/USD prices are effectively unchanged this week, despite the pair ranging close to 150 pips. As a consequence, weekly movement remains loitering mid-range between demand at 1.2589-1.2759 and a supply coming in at 1.3120-1.2957.

On the daily timeframe, we can see that price bounced strongly from the support area at 1.2818-1.2752 last week, which happens to intersect with a channel support line etched from the low 1.2365. Another key thing to note here is this area is seen glued to the top edge of the aforementioned weekly demand. To the upside, however, there's a lot of wood to chop through between 1.2913/1.2855ish (green arrow), before price can look to approach the resistance area at 1.3058-1.2979.

Following Janet Yellen's speech on Friday, the US dollar plunged across the board and lifted the GBP above both the H4 mid-level resistance at 1.2850 and June's opening level at 1.2870. The day ended with the unit retesting 1.2870 as support.

Suggestions: A decisive close above the 1.29 handle, followed with a retest of this number as support is, in our estimation, a strong signal that the bulls may be looking for 1.2950. Trading beyond 1.2950 is challenging, nevertheless, due to the underside of weekly supply positioned at 1.2957 and the lower edge of the daily resistance area at 1.2979.

Data points to consider: UK banks closed in observance of the Summer Bank Holiday. No high-impacting news events scheduled today.

Levels to watch/live orders:

• Buys: Watch for H4 price to close above 1.29 and then look to trade any retest seen thereafter ([waiting for a lower-timeframe buy signal to form [see the top of this report] following the retest is advised] stop loss: dependent on where one confirms the number).
• Sells: Flat (stop loss: N/A).

AUD/USD:  

Weekly gain/loss: + 4 pips

Weekly closing price: 0.7928

Weekly bulls, as can be seen from the weekly timeframe, continued to defend the support area at 0.7849-0.7752 last week. Further buying from this vicinity could eventually see the bulls shake hands with resistance carved from 0.8075 (a resistance line that stretches as far back as 2008).

Turning over a page to the daily timeframe, the candles are seen trading 40 or so pips ahead of the Quasimodo resistance level at 0.7988. Traders may have also noticed the other Quasimodo resistance level lurking just above at 0.8030. This line was already tested at the end of July, and as you can see, held beautifully.

Looking across to the H4 candles, the 0.79 handle was reclaimed as support on Friday after the release of Janet Yellen's speech, lifting the commodity currency up to the 0.7950 neighborhood. In previous reports you may recall our team highlighting the 0.80 level as a particularly interesting sell zone. Apart from 0.80 being a watched round number, there are several nearby structures that deserve mention:

The daily Quasimodo resistance level at 0.7988.

A H4 Quasimodo resistance level at 0.8007.

A H4 127.2% Fib ext. point at 0.80 taken from the low 0.7807.

August's opening level at 0.7998.

A H4 Harmonic Gartley reversal point at the 78.6% Fib resistance line drawn from 0.8011.

Suggestions: While the above structures (H4 green sell zone) boast attractive confluence, one must take into account the possibility that a fakeout may be seen up to the daily Quasimodo resistance level at 0.8030 sited just above the green zone. Traditionally, when trading the Gartley Harmonic pattern the stop-loss order should go beyond the X point (0.8065). If you were to follow this, a fakeout up to the daily Quasimodo resistance is not a concern. It is more for the aggressive traders who will likely look to position stops just beyond the green zone. Should you be one of those traders, you may want to consider waiting for the H4 candles to prove seller intent from the sell zone (in the form of either a full, or near-full-bodied bearish candle), before pulling the trigger. This will help avoid a fakeout should it occur.

Data points to consider: No high-impacting news events scheduled today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 0.8011/0.7988 (stop loss: either wait for a H4 bearish candle to form in the shape of a full, or near-full-bodied candle, and place stops above the candle's wick. Another option is to simply enter at 0.80 and place stops above the H4 Harmonic X point at 0.8067).

USD/JPY

Weekly gain/loss: + 13 pips

Weekly closing price: 109.32

Similar to the week before, last week's trading shows little change. The only difference this time is weekly price printed an indecision candle and not an inverted selling wick. Should the bulls remain lethargic here, this could eventually lead to the unit driving lower and challenging the large support area seen just below at 105.19-107.54.

Fusing closely with the weekly demand, however, is a daily trendline support etched from the low 100.08. Assuming that this line remains in place, this could attract fresh buyers into the market as the next upside target comes in at a resistance level marked at 110.76.

On the H4 timeframe, we can see that the candles spent the week forming an ascending channel formation (108.63/109.59). On Friday, price ran through bids at 109.50 after Janet Yellen's speech at Jackson Hole and concluded the day closing ahead of the 109 handle.

Suggestions: Given that the 109 handle converges with the noted H4 channel support line, a test of this number would be attractive – even more so considering the current daily trendline support in play. Should this come to fruition, we'd expect the unit to reach at least 109.50.

Data points to consider: No high-impacting news events scheduled today.

Levels to watch/live orders:

• Buys: 109 region ([waiting for a lower-timeframe confirming buy signal [see the top of this report] to form before pulling the trigger is advised] stop loss: dependent on where one confirms this area).
• Sells: Flat (stop loss: N/A).

USD/CAD:  

Weekly gain/loss: – 102 pips

Weekly closing price: 1.2480

The USD/CAD sustained further losses last week, consequently pushing the weekly candles deeper into the weekly support area coming in at 1.2433-1.2569 (unites with a trendline support etched from the low 0.9633).

Since daily price struck the underside of a resistance zone drawn from 1.2831-1.2763, the pair has been trading south. Should the bears continue to dominate from here, the next area on the hit list is the nearby demand penciled in at 1.2303-1.2423 (positioned just below the aforementioned weekly support area).

Reviewing Friday's movement on the H4 timeframe, we can see that price aggressively pushed through August's opening level at 1.2497 (following Yellen's comments) and ended the day testing a very interesting buy zone at 1.2450/1.2469. Comprised of a H4 mid-level support at 1.2450, a H4 AB=CD 161.8% Fib ext. point at 1.2469 and a powerful XA 88.6% Fib retracement at 1.2455 (Harmonic bat pattern), this area, along with the noted weekly support area and its converging weekly trendline support, will likely offer a buy trade today.

Suggestions: In the event that the H4 Harmonic pattern completes at 1.2455, we will be interested buyers here. Additional confirmation, in our opinion, is not required since we can comfortably place stops beyond the X point (1.2413) and still achieve adequate risk/reward.

Data points to consider: No high-impacting news events scheduled today

Levels to watch/live orders:

• Buys: 1.2455 (stop loss: 1.2411).
• Sells: Flat (stop loss: N/A)

USD/CHF:  

Weekly gain/loss: – 87 pips

Weekly closing price: 0.9559

Recent action on the weekly timeframe shows the USD/CHF extended its bounce from the trendline resistance taken from the low 0.9257. This has firmly placed the support area at 0.9443-0.9515 back on the hit list.

A closer look at price action on the daily timeframe, however, actually shows that the unit is now tackling a support level coming in at 0.9546, which happens to unite with a channel support etched from the low 0.9438. What also gives this support extra credibility is the AB=CD (black arrows) 127.2% ext. point at 0.9542.

Dollar bears were the clear winner on Friday after Fed Chair Janet Yellen offered little insight on monetary policy. The move took out the 0.96 handle and July's opening level at 0.9580, potentially clearing the path south down to the 0.95 handle.

With the above taken on board, we feel we may be in a little bit of a tricky situation. Weekly suggests further selling could be on the cards. Daily shows price trading from a confluent support and H4 price indicates a move down to the 0.95 handle could be on the horizon. To that end, whatever direction one selects, you're going to be up against either possible daily buying or weekly selling.

Suggestions: A short from between 0.96/0.9580 is attractive given weekly flow, but this would, as explained above, entail selling into a potential move from daily support. Personally, we feel the best path to take here is to remain on the sidelines and reassess structure going into tomorrow's open.

Data points to consider: No high-impacting news events scheduled today.

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: Flat (stop loss: N/A).

DOW 30:  

Weekly gain/loss: + 124 points

Weekly closing price: 21818

Breaking a two-week bearish phase, the bulls recovered nicely from a weekly demand base last week at 21462-21645. With little overhead resistance to contend with on the weekly timeframe, further buying could be seen in the weeks to come.

Daily price on the other hand is currently sandwiched between support at 21664 and a supply base drawn from 22076-21929. Therefore, it may be a good idea to wait for price to engulf the current daily supply before looking to buy this market and join, what seems to be, a never-ending trend.

Since Tuesday, the H4 candles have been consolidating between support at 21771 and August's opening level pegged at 21913. Our initial thought was to look to buy above 21913, but this would have us entering long into the underside of the current daily supply area. Not the best of trading ideas!

Our suggestions: Another option could be a buy from the current support level. With additional confirmation in the form of a H4 bullish candle (preferably a full, or near-full-bodied candle), we feel a buy from here may be viable, targeting 21913, followed closely by 21929: the underside of the daily supply.

Data points to consider: No high-impacting news events scheduled today.

Levels to watch/live orders:

• Buys: 21771 region ([waiting for a reasonably sized H4 bullish candle to form – preferably a full, or near-full-bodied candle – is advised] stop loss: ideally beyond the candle's tail).
• Sells: Flat (stop loss: N/A).

GOLD:  

Weekly gain/loss: + $7.7

Weekly closing price: 1291.2

For the past two weeks, weekly buyers and sellers have been seen battling for position within a green weekly resistance area comprised of two weekly Fibonacci extensions 161.8/127.2% at 1312.2/1284.3 taken from the low 1188.1. This is the highest price has closed within this zone since the area has been in play.

Moving down to the daily timeframe, we can see resistance at 1295.4 remains in motion. Apart from the two occasions on 17/04/2017 and 06/06/2017, there's little history registered with this number! For that reason, we may see price eventually break above this line and head toward the resistance carved from 1308.4 (not seen on the screen), which boasts very attractive history dating back to early 2011.

A brief look at recent dealings on the H4 timeframe saw the yellow metal aggressively whipsaw through support at 1280.9, and conclude the day mildly paring gains ahead of the daily resistance mentioned above at 1295.4. The initial move came after Yellen's rather uneventful speech at Jackson Hole.

Our suggestions: Based on the above notes, our desk will not be looking for (long-term) shorts until the daily resistance line plotted at 1308.4 is in play. This is due to the history surrounding this number and its position within the current weekly resistance area (allowing us to place stops tightly above this zone).

Levels to watch/live orders:

• Buys: Flat (stop loss: N/A).
• Sells: 1308.4 region. This is, given the location of this daily resistance on the weekly timeframe, a fantastic level to be looking for shorts if the number comes into view.

Global Markets:

• Asian stock markets: Nikkei down 0.04 %, Shanghai Composite rose 0.85 %, Hang Seng climbed 0.43 %, ASX 200 fell 0.65 %
• Commodities: Gold at $1299.50 (+0.13 %), Silver at $17.12 (+0.44 %), WTI Oil at $47.69 (-0.38 %), Brent Oil at $52.16 (+0.35 %)
• Rates: US 10-year yield at 2.17, UK 10-year yield at 1.05, German 10-year yield at 0.38

News & Data:

• EUR German Ifo Business Climate 115.9 vs 115.5 expected
• USD Core Durable Goods Orders m/m 0.5 % VS 0.4 % expected
• USD Durable Goods Orders m/m -6.8 % VS -6.0 % expected
• Oil markets roiled as Hurricane Harvey hits U.S. petroleum Industry- RTRS

CFTC Positioning Data:

• EUR long 88K vs 79K long last week. Longs increased by 9K
• GBP short 46K vs 32K short last week. Shorts increased 14K
• JPY short 74K vs 77K short last week. Shorts trimmed by 3K
• CHF short 2K vs 1K short last week. Shorts increased by 1K
• CAD long 51K vs 51K long. No change from last week.
• AUD long 60k vs 60k last week. No change from last week
• NZD long 22K vs 25K long last week. Longs trimmed by 3K

Markets Update:

Asian equities fluctuated early on Monday as market participants struggled for direction after U.S. and European central bankers didn't provide fresh policy guidance. U.S. equity futures fell as investors weighed the damage from Tropical Storm Harvey on U.S. oil refining centres.

AUDUSD opened on a weak note but soon gathered a bit of steam. The Aussie moved up to post a 25 pip from its early low against the US Dollar halting its gain around 0.7950. Currently price has slipped back down to 0.7930 losing 20 pips from the high. NZD/USD followed a similar pattern as is currently seen trading at 0.72350

EURUSD reached 1.1965 early on Monday, the highest since Jan. 6, 2015 following the Jackson Hole speeches. However, price did not extend further as Asian liquidity came online and the EUR retraced some of their early pop. Currently the Euro has slipped to back around 1.2915.

USDJPY is currently seen trading at 109.10 after ranging between 109.15 and 109.40 early on Monday. Overall, the yen advanced 0.2 percent against the US dollar, extending gains from Friday.

Upcoming Events:

• GBP Bank Holiday
• 07:15 GMT – (CHF) Employment Level (Q2)
• 08:00 GMT – (EUR) M3 Money Supply y/y
• 12:30 GMT – (USD) Goods Trade Balance (Jul)

The Week Ahead:

Tuesday, August 29th

• 12:30 GMT – (CAD) RMPI m/m
• 14:00 GMT – (USD) CB Consumer Confidence

Wednesday, August 30th

• (EUR) German Prelim CPI m/m
• 01:30 GMT – (AUD) Building Approvals m/m
• 01:30 GMT – (AUD) Construction Work Done q/q
• 07:00 GMT – (CHF) KOF Economic Barometer
• 07:00 GMT – (EUR) Spanish Flash CPI y/y
• 08:30 GMT – (GBP) Net Lending to Individuals m/m
• 12:15 GMT – (USD) ADP Non-Farm Employment Change
• 12:30 GMT – (CAD) Current Account
• 12:30 GMT – (USD) Prelim GDP q/q
• 13:15 GMT – (USD) FOMC Member Powell Speaks
• 14:30 GMT – (USD) Crude Oil Inventories

Thursday, August 31st

• 01:00 GMT – (CNY) Manufacturing PMI
• 01:00 GMT – (CNY) Non-Manufacturing PMI
• 01:00 GMT – (NZD) ANZ Business Confidence
• 01:30 GMT – (AUD) Private Capital Expenditure q/q
• 06:00 GMT – (EUR) German Retail Sales m/m
• 07:25 GMT – (GBP) MPC Member Saunders Speaks
• 09:00 GMT – (EUR)) CPI Flash Estimate y/y
• 09:00 GMT – (EUR) Core CPI Flash Estimate y/y
• 12:30 GMT – (CAD) GDP m/m
• 12:30 GMT – (USD) Unemployment Claims
• 12:30 GMT – (USD) Personal Spending m/m
• 13:45 GMT – (USD) Chicago PMI
• 14:00 GMT – (USD) Pending Home Sales m/m

Friday, September 1st

• 01:45 GMT – (CNY) Caixin Manufacturing PMI
• 07:15 GMT – (EUR) Spanish Manufacturing PMI
• 08:30 GMT – (GBP) Manufacturing PMI
• 12:30 GMT – (USD) Average Hourly Earnings m/m
• 12:30 GMT – (USD) Non-Farm Employment Change
• 12:30 GMT – (USD) Unemployment Rate
• 14:00 GMT – (USD) ISM Manufacturing PMI
• 14:00 GMT – (USD) Revised UoM Consumer Sentiment